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Appeal No. VA95/4/011 AN BINSE LUACHÁLA Henkel Ireland Limited APPELLANT RE: Factory and Grounds at Map Ref: 3, Townland: Inchera,
ED: Caherlag, RD: Cork Upper, Co. Cork B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL (1) Henkel Ireland Limited is the owner, user and occupier of a large chemical plant and works situated at the Little Island Industrial Estate in the County of Cork. This plant produces two main product types namely:- (a) Tetra Acetyl Ethylene Diamine (TAED) - Used essentially in the copper
mining industry, and
The property in its then state was first valued in 1976 and thereafter
as additions, alterations and improvements took place the same were subject
to frequent revision and appeals. The revision immediately prior to that
now before this Tribunal was also the subject matter of a Tribunal decision
given on the 15th day of December, 1994. (2) The November, 1991 revision was in respect of three developments which in the Tribunal's judgment were described as follows:- "(1) Erection of TAED plant: (1) TAED Extension (4) Though no reduction was achieved at First Appeal stage the parties, subsequent to the publication of that decision, continued in discussion and in consultation with a view to agreeing all or at least some of the items above listed. Their efforts have been successful and the only two items now before this Tribunal are those numbered 1 & 2, namely the TAED extension and the AAR plant. The Tribunal would like to place on record their appreciation of the parties continuing efforts even after First Appeal stage and would like to say that, in its opinion, there should be no reason in principle why, even up to Tribunal stage, the parties should not explore every possibility of amicably resolving issues which still remain outstanding. It must be more preferable for agreement to be reached rather than a solution to be imposed. (5) This appeal and the appeal in Janssen Pharmaceuticals (Ireland) Limited
v. Commissioner of Valuation (VA95/4/010) were effectively heard together
by this Acetic Acid Recovery (AAR) Plant:- (6) In the table which follows there is set out what each party suggests should be the correct rateable valuation on these two units:-
(7) It is accepted by both parties that since the premises in question
is in effect a specialised high class industrial complex there is not
available any comparable passing rents which could be used as a method
for identifying the NAV. Accordingly, an alternative approach must be
adopted. On behalf of the appellants Mr. Killen argues that the best method
of valuation in this instance is to apply a rate per square foot to the
units in question. This, Mr. Dineen on behalf of the Commissioner strongly
disputes. He suggests that the only appropriate method is to apply the
Contractor's Basis of Valuation (CBV) and accordingly his entire evidence
was predicated on this approach. Knowing from the written submissions
that this was so Mr. Killen, in a helpful way, responded by preparing
a valuation also based on this method but making it clear at the same
time that his primary submission still stood, namely that the correct
approach was one based on a rate per square foot. In essence this was
the major difference between the parties. There were it should be added
also differences within the contractor's method with these being primarily
directed to three issues namely, whether a specific value should be given
to the site, secondly whether the capital value should be adjusted to
November, 1988 or 1990 and thirdly as to what was the appropriate decapitalisation
rate. (9) It is clear from the extract quoted above that the Tribunal which heard the Janssen case, was not making a decision on principle as to whether the comparative approach was preferable to the capital cost approach in the valuation of pharmaceutical/chemical plants. In that case it preferred the former but in so doing it was also leaving open the issue as to whether in a future case the latter method could be used. Indeed, the Tribunal's reference to the type of evidence required and the method by which that might be obtained is in our view proof positive that the issue of principle was left undetermined and that, if principle be applicable at all, the same would be decided in a future case where the circumstances were more appropriate. (10) In the its decision of the 15th December, 1994, when dealing with
the 1991 revision of certain hereditaments within the appellant's property,
(VA93/3/004 - Henkel Ireland Limited v. Commissioner of Valuation), the
Tribunal at pages 5, 6 & 7 of its judgment set out and recorded what
its findings were. It is unnecessary for the purposes of our decision
in the instant case to repeat in extenso these findings but it is of importance
to refer to paragraph 6 which states, "the decisions of the Tribunal
in VA93/3/005 and VA93/3/006 - F.M.C. International Limited and the earlier
VA89/0/042 and VA90/3/015 - Janssen Pharmaceuticals Limited v. The Tribunal then went on to apply the contractor's method in that particular appeal. (11) There was another point decided in that case which is both important and material in the present case. As will be recalled the three items for valuation were firstly the TAED plant, secondly the extension of the Aldoxine Plant and thirdly Assorted Additions. On behalf of the Commissioner it was suggested that in relation to the Aldoxine plant the capitalisation rate should be 4.8% but that in relation to the TAED plant it should be 6%. The Tribunal, in dealing with this, said at paragraph 9 of its findings "the approach of the respondents in relation to the TAED building is basically appropriate but the Tribunal finds no reason why the NAV of same should exceed 4.8% of the capital cost as in the Aldoxine extension and accordingly adjust the NAV of £140,000 based on 6% return to the appropriate figure of £110,400 based on 4.8% return resulting in a valuation based on the 0.5% ratio of £552". It can therefore be seen that the Tribunal, by this decision of December 1994 applied a rate of 4.8% to both of these units and rejected the higher rate suggested on behalf of the Commissioner. (12) In the present case it will be evident from the aforegoing that
the first item in dispute in this appeal is the extension to the TAED
building (being the subject matter of the decision last mentioned) and
that the second item is the AAR plant. Both of these now of course form
an integral part of the undertaking being carried on by Henkel at its
premises at Little Island. Both were constructed to a standard similar
to the original TAED building, and although not identical, are in terms
of nature and size, similar to the other individual and integrated components
of this chemical plant. That being the case it seems to us that it would
be quite wrong to disregard the approach adopted by the Tribunal in the
1993 appeals and instead to substitute an alternative method of valuation.
If one where to so do, how could it be said that this Tribunal would be
acting fairly or uniformly or justly. For example if the Tribunal, in
the 1993 appeal, had favoured the comparable approach it would appear
to us that for the purposes of the present appeal we should likewise have
to adopt such an approach. (13) During the course of the hearing we received evidence dealing with what figures and costs would be appropriate if the contractor's method of valuation was preferred. In our view the following should apply. The adjusted construction costs in relation to the extension should according to the Commissioner of Valuation be £180,000 whereas Mr. Killen is some £3,600 in excess of that. In relation to the AAR plant the respective figures are £780,000 and £810,000. The difference is partly explained by the fact that in the Commissioner's view the base date should be November 1988 whereas Mr. Killen suggests that it should be 1990. We feel that the Commissioner is correct in his approach and cannot see how in fact for the purposes of using the fraction the base year should be 1990. In both cases therefore we propose to take the Commissioner's figures. To these figures we intend to apply a rate of return of 4.8% being the same as that applied by the Tribunal in the Henkel decision above mentioned. We could not we feel apply a different rate. This is essentially because of the earlier decision but also because there is not in our view any material or significant change in circumstances between the 1993 and the present appeals which would justify a reconsideration of the appropriateness of this rate of return. At this decision, it should be clearly said, is not to the effect, that in certain circumstances a higher rate may be more appropriate (see Intel (Ireland) Limited v. Commissioner of Valuation - VA94/3/025). Accordingly, the NAV in respect of the extension shall be 4.8% of £180,000 with a resulting RV of £44 and in the case of the AAR plant 4.8% of £780,000 with the resulting RV of £190. (14) The Tribunal therefore determines the rateable valuation on the
hereditament under appeal as follows:-
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